Friday, July 31, 2009

“Come to IIPM, I’ll see you there,” says Shah Rukh Khan with that famous smile of his. And even as the big day nears, the excitement at the Indian Institute of Planning & Management (IIPM) is fast turning into a frenzy. The man, who is famous for his unlimited energy, seems to have infused some of it into the staff and students too, for no one seems to be going home (or sleeping) for days now! It’s work, work, work everywhere – every detail being looked into, everything being checked twice, just to be sure there are no goof-ups on D-day when the business quiz would be held and of course, no one is complaining!

SRK is someone who features regularly in Bollywood discussions, and also boardroom discussions, for a simple reason – the man is not just an actor, but an intelligent actor. He is not just a brand ambassador, but an intelligent business man (probably the economics background helps!). Every word, every statement, every comment is well thought, well reasoned and most of all, well worded. He is one of those rare celebrities who can never be outwitted! Not surprising then, that he features regularly in my write-ups and lectures in advertising. What is it that makes SRK such an interesting case study for MBAs! Let’s explore SRK, the brand.

ART OF WAR

There is a world famous book by the same name written by Sun Zi in the 6th century B.C. A book so old, yet imparting wisdom as relevant and useful even today that helps leaders and managers workout their business tactics. A famous quote from the book goes like this, “Know your enemy, and know yourself and victory will always be yours.” SRK seems to have understood this pretty well and has fought all his wars successfully. Of course, we are not taking about the Amitabh-SRK spat or the Salman- SRK imbroglio or even the Vidhu Vinod Chopra-SRK duel. We are not even referring to the Aamir-SRK face-off or the war between producers – distributors and multiplex owners that Shah Rukh helped put an end to. We are talking about the brand wars that he fights regularly and wins almost every time.

In 2005, ITC Foods announced that Shah Rukh Khan would be the brand ambassador for its flagship brand Sunfeast, endorsing the entire range of snacks under the brand umbrella. In 2003, when Sunfeast was launched, no one in the industry thought that the brand could make any major dent in the market share of its competitors’ – the old and mighty Parle and Britannia, who had dominated the country’s biscuit business for years. But ITC played its cards carefully. First, it brought in the world’s most revered cricketer Sachin Tendulkar to endorse their biscuit. “Sachin’s fit-kit” was an amazing idea and a surefi re hit. Next, the company roped in the evergreen charmer Shah Rukh Khan. Biscuits mean children, but SRK’s presence meant not just influencing children, but people across age groups. ITC Food’s strategy worked. According to A. C. Nielson’s retail sales audit of March 2006, both Britannia and Parle started losing volumes significantly. A worried Parle hastily roped in Hrithik Roshan to endorse its “Hide & Seek” brand. The move did not work. SRK won the hearts of consumers and the sun began truly shining for Sunfeast.

Take the laptop market. HP roped in Shah Rukh to endorse its range of brands from Compaq to sundry printers, with the famous tagline, “The computer is personal again.” This caused a flurry of high profile branding in the PC segment. Lenovo roped in Saif Ali Khan as its ambassador. Acer got Hrithik. Yet, SRK ruled this market. Interestingly, when it comes to being a pioneer and offering consumers the latest technology, it has always been Acer that has come up tops and with the most unique offerings. Think of it, Acer was the first to launch a Ferrari laptop range, a gemstone range designed by BMW designers and many such innovations. However, with SRK endorsing Compaq, Acer did not stand a chance. People perceived Compaq to be a better brand and HP held on to its market leadership. When the Badshah enters, you stand no chance.

OF BUILDING BRANDS

Every marketer knows how tough it is to build a strong brand and how long it takes. Yet, there are some who make it seem like a cake-walk. It’s common knowledge that when SRK entered Bollywood he knew no one. In fact, he knew nothing except that this is where he would rule one day and so he did. Today brand SRK is so powerful that anything it touches turns to gold. When India was introduced to the world of club cricket, not many thought the Indian Premier League (IPL) would work. It did. However, it has worked better for some, as compared to others. Yes, you guessed it right. It has worked best for SRK. In May this year, UK’s Intangible Business released the IPL Brand Value Scoreboard 2009 that measures the strengths and weakness of the eight IPL Franchises. Shah Rukh Khan’s Kolkata Knight Riders (KKR) topped the charts with a Brand Value of $22 million followed by Delhi Daredevils. No team excites the audiences more than Kolkata Knight Riders. Even when it loses a match, it doesn’t fail to excite valuers. As per Richard Yoxon, Director, Intangible Business, “Winning games is not enough to build a successful sports brand. Teams need to engage the local community, attract star players who inspire a wide audience and develop a strong marketing communications programme.” The various factors that it measures to determine a brand’s strengths include popularity of team, loyalty of supporters, owners equity viz. a measure of the impact the franchise owners have on the brand, brand awareness, et al.

KKR beat all its rivals and reserved the top slot for itself, despite a dismal performance during IPL Season 2. Look at the team’s partners. Hyundai (the country’s second largest car manufacturer) is the ‘Traveling Partner’ of Shah Rukh’s team; Sprite is the ‘Pouring Partner’, Nokia may have cut 1,700 jobs worldwide and is supposedly still on a cost cutting spree, yet this year it went all out to associate itself with KKR. After all, Nokia has been voted as the second most visible brand during IPL last year next to SRK’s KKR. Guess it just made good business sense to associate with a winning brand then. This time round, Nokia even decided to pack in more KKR value added services, like cricket scores, player interviews, games, et al. It is the dynamism of this one man that has made KKR such a big brand in a short span of time. Not surprisingly, Kolkata Knight Riders have also become the favourite brand ambassador of a lot of Kolkata based companies. After all, how long could they manage with Mithun da and Saurav Ganguly. SRK has managed to charm his way into the hearts of a lot of Bengalis and brands don’t want to miss the wave. Kolkata based Rs.190 crore Linc Pen signed up SRK in Dec. 2008 and renewed its contract immediately. SRK gave them likeability in the market. After all, if people associate with SRK, they would automatically do the same with this brand.

ONLY SRK WORKS

When Fair and Handsome, the fairness cream for men, was launched, Emami knew that the only person to play the role of brand ambassador effectively for an innovative product like this, could be Shah Rukh Khan. There is no shortage of brands today and no shortage of celebrities. Yet, very few associations seem to work. Many a times, the celebrity in question tends to overshadow the brand. It is indeed quite common for people to remember the celebrity, but conveniently forget the brand. In an oft-quoted survey, when people were asked which brand of suiting did Nawab Pataudi (you may now know him as Saif’s father) endorse, almost every respondent said “Raymonds.” After all, Pataudi was the complete man, a positioning that Raymonds had carefully crafted for itself. But Pataudi’s bill had been in fact footed by Grasim! Now think of the “Sunshine Car”. I bet that the first name to pop-up in your mind would be of Santro. The second? Shah Rukh! Be it Sunfeast or Santro, SRK always brings the sun out for brands. So when Sona Chandi Chyawanprash wanted to take a bite from the Rs.130 crore chyawanprash market in India, it found Dabur (with 60% of the market share) blocking the way. It was going to be a gigantic fight and a giant was precisely what Sona Chandi needed to tide over its worries. They got in SRK, knowing that only he could trigger their sales and they were right. The brand saw a 28% increase in their market share soon after.

At a time when companies are dropping their celeb endorsers (Tiger Woods recently ended his 9 year relationship with GM) to save costs, some companies know they cannot do without their brand heroes. A good marketer knows that it’s not just a good product, but good perception about the product in the minds of consumers, which makes all the difference between success and failure. And SRK has perfected this art of making himself and the brand likeable.

Marketers know it, which is what makes SRK not just the king of Bollywood, but also of endorsements. With 39 brands in his kitty, he was the highest endorser (in terms of number of brands) for 2008. But the count does not seem to matter for SRK. Rather, he believes, it’s better to burn out than to rust out! Over 39 brand endorsements, 1 billion fans and 1 highly valued cricket team... guess it all adds up to 1 fact – SRK is the biggest brand in India!

Thursday, July 16, 2009

Conventional wisdom says ‘entry barriers’ should prevent new players and brands from upstaging their older and more established rivals. Yet, the marketplace is littered with example after example of new brands that have successfully climbed Mount Everest. How do they do it?

Nothing is permanent-in life, relationships and business! This eternal truth is brilliantly demonstrated by the rise, fall and rise of brands in the marketplace. Leaders of yesterday have become laggards today; and might become leaders again tomorrow or even disappear altogether. Students of economics and management are taught that every market has ‘entry barriers’ that make it very difficult, if not impossible for new players and brands to compete with and outperform older and well established rivals. But, what fascinates more than the so called entry barriers is the frequency and intensity with which new brands conquer more established rivals across the world. There are literally hundreds of such examples across sectors, geographies and segments. What makes the new entrants overcome formidable entry barriers and beat market leaders at their own game?

In contemporary times, technology and innovation play a key role in transforming late entrants into global power houses. Back in the early 1990s, when I was a management student, Microsoft was the unchallenged global leader. The advent of the Internet saw Yahoo first challenge the supremacy of Microsoft. Back then, nobody had heard about a word called Google. And yet, it is Google that is the undisputed and virtually unchallenged global brand in the business today. Bill Gates and his team at Microsoft have poured billions of dollars to create a search engine that can beat Google. No luck so far. And of course, it does appear as if the once powerhouse Yahoo is gently fading into history. And who knows, the rate at which new technology is evolving, the next generation might see a brand bigger than even Google!

Technology has played a key role in one of the biggest brand wars of the last decade or so. Going back to my days as a student, Motorola used to be familiar and awe inspiring brand name. Telecom was then – it still is – the market with the biggest promise and potential. But, we had only vaguely heard of mobile phones and Nokia was of course a name that probably only a few hardy souls in Finland were familiar with. The company was originally involved in manufacturing paper, pulp and rubber! But now, Nokia is the undisputed mobile phone and telecom global brand leader while Motorola is struggling of stave off bankruptcy. Quite clearly, brand Nokia has been more successful in harnessing mobile handset technology than Motorola, despite the huge head start

Technology and successful marketing of the consumer benefits delivered by the new technology can also explain why a relative newcomer dislodged an iconic brand in India as the unquestioned market leader. Back in the 1980s, Bajaj Auto ruled the Indian two-wheeler market. The Indian market was then overwhelmingly dominated by scooters with motorcycles coming a distant second. But that was the time Japanese two-wheeler brands like Suzuki, Yamaha and Honda made an entry in India. The Hero group tied up with Honda and launched the Hero Honda motorcycle. It was arguably the first ‘fourstroke’ bike in India and delivered superb fuel efficiency. The early Hero Honda ads brilliantly sold this value proposition to Indian consumers with the now legendary tagline – ‘Fill it, Shut it, Forget it’. Last year, Hero Honda sold more motorcycles than Bajaj and TVS together and is perhaps the largest motorcycle company in the world now. Sometimes, established brand leaders are demolished in the marketplace by new rivals because of sheer complacency and inability to move with the times. I will give one global and one Indian example to show how pervasive this tilt towards complacency is. Once upon a time, General Motors (GM) – along with Ford – virtually ruled the world of automobiles. Brands like Chevrolet and Pontiac had become gold standards when it came to customer loyalty and brand equity. By the time Toyota started selling its cars in the United States, the giant GM did not even deign to acknowledge the potential new rival. After the oil shock of the seventies, Toyota focused increasingly on fuel efficiency and smaller sizes while GM continued with gas guzzlers. The result: GM had to eventually fi le for bankruptcy in 2009 while Toyota is the gold standard today when it comes to quality and customer satisfaction in the automobile industry.

Let’s now go to the once Imperial capital of the British Empire, Kolkata in the early 1980s. Investors had already started fleeing West Bengal and the city was in seemingly terminal decline. The unchallenged brand leader in the newspaper market in Kolkata was The Statesman, which was the favourite morning tea companion of Kolkata residents for decades. The Ananda Bazaar Group took a huge gamble and decided to launch The Telegraph to compete with The Statesman. Before the latter could shrug off complacency, The Telegraph had used contemporary style, design and better coverage to emerge as the number one newspaper brand in the city. Today, Kolkata has even The Times of India and The Hindustan Times; but it is The Telegraph which is the brand leader while The Statesman is an old and ageing relic of the past.

Sometimes, changes in societies and lifestyles can cause seismic changes in brand hierarchies. For decades, Adidas and Reebok ruled the global sports footwear market; with virtually every athlete participating in the Rome Olympics in 1952 sporting an Adidas. In the United States, Reebok had emerged as the favourite. Then the ‘cultural revolution’ swept across America in the late 1960s and the baby boomers of America started becoming very ‘sporty’ and health conscious. In came an unknown brand called Nike that brilliantly rode this new found American love for fitness, jogging and health. Without any doubt, Nike – with its now famous Swish – is the undisputed brand leader in the world. Both Reebok and Adidas have struggled and even merged back in 2005 to be able to compete more effectively. But Nike has not budged from its position as the number one.

Many such brand conquests can also be ascribed to the relentless leveraging and use of one of the key elements of 4Ps – price. In the early 1960s, Bentonville, in the state of Arkansas (the state that gave Bill Clinton to America!), was unknown to most Americans. That was when Sam Walton was quietly fashioning the ultimate retail revolution. Since the early days of Sam Walton, Wal-Mart has relentlessly focused on low prices as the key strategy to lure customers and keep them loyal. When Walton started his legendary career and Wal-Mart, now one of the largest companies in the world, the brand leaders in retail were giants like Sears Roebuck and JCPenney. By the time Wal-Mart was quietly capturing suburban America in the 1970s, Sears Roebuck was attracting attention by building the then tallest building in the world in Chicago in 1975. Today, Sears Roebuck and JCPenney are fading relics of American capitalism while Wal-Mart continues to ruthlessly – and often controversially – use low prices to remain the brand leader.

Back in India, two relatively unknown and unrelated companies too used price as a fabulously successful weapon to frighten and dislodge existing brand leaders in the 1980s. Surf was the reigning brand in the Indian detergent market and had demolished virtually all rivals in the marketplace (P&G entered the Indian market much later in 1992). In came an unknown brand called Nirma that was single mindedly focused on low price. The massive success of Nirma frightened the living daylights out of honchos at Hindustan Levers who fought a rearguard action by launching low cost Nirma rivals like Wheel. Around the same time, an entrepreneur named Gulshan Kumar and his brand T-Series were giving music lovers in India a reason to hum in contentment. The then market leaders HMV and Polydor were used to charging exorbitantly for LP records and cassettes. T-Series sold cassettes for Rs.10 when HMV was selling them for at least Rs.40. T-Series hasn’t looked back since.

Of course, there is that rare occasion when a once formidable brand slips and tumbles and is written off as history – only to re-invent itself and re-emerge as a global powerhouse. You guessed right! I am talking about Apple that was the darling of computer and software lovers and geeks in the 1980s. Apple virtually died as a brand in the 1990s. And then came the iPod! The message is clear for entrepreneurs. You can beat formidable brands. And you can even revive them!

Thursday, July 2, 2009

During his 1993 Super Bowl Performance of Heal The World, Michael Jackson elevated the mood of an entire stadium with just a single song. That’s the power of live music. To excel, artists today and tomorrow will have to carefully cultivate the same art of carrying the audience along for the musical joyride...

11 tickets per second! That was the selling rate of tickets for the ‘This is it’ tour at the O2 arena in London of the legend called Michael Jackson. All shows were sold out in a matter of minutes. According to its organisers ‘This is it’ became the fastest selling tour in history with people as far away as Japan, Belgium and Dubai, queuing up to purchase tickets, some even willing to pay up to $700 for tickets bought from secondary markets. This, inspite of knowing that the tickets are non-refundable even if the shows got cancelled. Michael Jackson’s planned 50- show run at the O2 Arena in London would have been the highest-grossing single concert ever. More than $85 million worth of tickets had been sold for the shows, which were to begin July 13. If staged as per schedule, they would have been Jackson’s first solo shows in twelve years.

MUSIC WILL NEVER BE THE SAME AGAINYes! For many of us, who have been crazy fans of Michael Jackson since his “Thriller” days, the world of music has altered forever. But it is true that the music world has also changed in more ways than one. Music used to be heard on gramophone records, then on cassettes, which gave way to CD’s. Now, of course, is the era of digital music with the iPod and the internet playing a big role in the way music is distributed and heard world over. Digitisation got with it a new evil – the rise of “pirated” music. Piracy is so rampant and pirates are so good that there is hardly any difference between the original and pirated versions of music scores. In fact, pirating is so prevalent in China that legitimate stores too sell pirated CDs. Chinese artists today hardly make any money from CD sales. Not just in China, but world over, artists are not making money from CD sales, although CD sales in themselves are increasing. The moment an original CD is made, pirates are already out on the streets with their cheaper and equally good quality version. So much so that musicians today consider CDs as just another way to promote themselves and their music. If their music is liked, then they have a chance of making money via other means. Their popularity could get them product endorsement deals and a chance to appear in commercials. More importantly, artists, musicians and rock stars these days are relying more on live shows to earn money. Think about it. Back in the 1940’s musicians had protested that recorded music would ruin the live concert business, then the largest source of revenue for the music industry. Today, once again, live concerts are proving to be their biggest revenue earners. The business model of the music industry is changing fast. Internet downloads and pirated CDs have brought down the perceived value of music. Eventually recorded music will make no money. Live concerts, on the other hand, seem to be back with a bang and are here to stay. Live music, and the experience it guarantees is difficult to replace. The feeling of the beats on your chest, the screaming fans, the crazy hysteria, all of these are things you cannot pack in a CD. It was this ‘hysteria’ that fans wanted to be a part of when they heard that Michael Jackson would be performing for the world – one last time. This was truly the last opportunity for many to experience the thrill of listening to the century’s greatest rock star – live!

ALL ABOUT MUSIC VENUES AND MUSICThe most exciting thing in life for a music fan is seeing his or her favourite band live. It’s this excitement and thrill that many companies are using to earn moolah for themselves. With live concerts becoming the lifeline, many artists are now moulding their careers differently. Instead of signing record labels, they are signing up with concert promoters like ‘Live Nation’, which today has become a major rival of music companies like EMI, Sony Music, Warner Music Group, et al. Famous artists like Madonna, U2, Shakira, choose to sign deals with ‘Live Nation’ rather than music companies, making the former a powerful force to reckon with. In February this year, ‘Live Nation’ merged with another giant Ticket Master to create ‘Live Nation Entertainment’. The two biggest names in live entertainment have not just created history, but a monolithical empire that would monopolise the business of live entertainment. Of course, a lot of eyebrows are being raised, but it just goes on to prove how important concerts have become today. According to Nigel Parker, author of the book Music Business, many consumers now seem more inclined to regard live performance as the defining experience of modern music. According to Parker, “The importance of live performance is underlined by the fact that the biggest-grossing live performers of recent years include veteran seventies performers such as Eagles, Rolling Stones & Pink Floyd, whose record sales no longer match their capacity to draw huge live audiences.” Before the business of recording sound started it was live music, today ‘live’ is back in business.

LIVE MUSIC IS BIG BUSINESSYes, concerts are money spinners for all and sundry! Now big artists are bypassing recording companies to associate themselves with concert promoters. Madonna entered into a $120 million contract with ‘Live Nation’, becoming the first major artist to endorse the auction and resale of her concert tickets on the internet. Shawn Corey Carter, better known by his stage name Jay-Z decided to end his long time relationship with record label Def Jam and made another $50 million deal with ‘Live Nation’ – creating a record of entering into one of the biggest music contracts ever awarded. Michael Rapino the CEO of ‘Live Nation’ foresaw the future of the music industry and today sits on a very successful business model. He started it as Clear Channel Communications and discovered the benefits of “Instant Live” recordings in 2004. A live performance was recorded directly during the show, burnt on CDs and sold to the audience as they left the venue. And so ‘Live Nation’ was formed in 2005 as a spin-off from Clear Channel Communications.

Today, there are websites offering you subscription services where you can listen to and experience live music concerts happening anywhere in the world, right on the computer screen in your bedroom. Surely, nothing can get bigger and more glamorous than a live concert. Who can forget the Live 8 concerts? Three billion people watched Live 8 in July 2005. It was the greatest show on earth. It promised to make poverty history and the world sang together in hope and happiness.

The future of music is indeed ‘Live’ and no one can prove it better than Michael Jackson himself. The mere announcement of his concert had the power to send the world of music into a tizzy and people over the world united to hear their favorite performer (in person) one last time. To excel in the business of music today, you need to have the persona to carry the audience with you during a live performance. You need to be a Michael Jackson who knew exactly what it took to drive his fans crazy – be it his moonwalk, his white gloved hand, his hair or his dance moves. This is it!

About Me

Rajita Chaudhuri is the Dean , Center for Higher Education @ IIPM. She is the Consulting Editor of '4Ps,Business&Marketing' magazine and 'MYOD'. She is the winner of the "Best Faculty in Marketing".Her passion is teaching.

Prof. Rajita Chaudhuri speaking at 'Thorns to Competition' book launch

IIPM 4Ps Bschool Quiz with SRK

Prof. Rajita Chaudhuri's Executive Communication Class - April 2011

Prof. Rajita's Class on Team Building

Followers

IIPM - India's Global B School

SUCCESS STORY – Selling a Business in India

In just a course of few months after IndiaBizForSale started its venture in India to make the business buyers and the business sellers meet, it successfully helped a professional business broker find a financial institution in Chennai he was looking for his client to acquire for further expansion of his business. Read more